The Electoral Commission was today urged to consider launching a full investigation into allegations that George Osborne solicited a donation to the Conservative party from the Russian billionaire Oleg Deripaska.

Chris Huhne, the Liberal Democrat home affairs spokesman, sent a letter to the commission saying that it was important to establish whether the law had been broken.

Huhne's intervention came after another Lib Dem MP, Norman Baker, said he would be asking parliament's standards watchdog to rule on whether Osborne should have declared his stay at Nathaniel Rothschild's Corfu villa in the Commons register of members' interests.

During the stay Osborne, Rothschild and the Conservative party chief executive, Andrew Feldman, had a conversation about a possible donation from Deripaska. As a foreigner, Deripaska is not allowed to donate to a British political party, although he owns a company based in the UK that would be allowed to make a donation.

The talks came to nothing and no money was ever paid to the Conservative party.

But this week Osborne has been embroiled in a row with Rothschild, who claims that the two Tories actively solicited a donation and that they contemplated "channeling" it through one of Deripaska's British companies. The Tories strongly deny these two aspects of Rothschild's account.

After Rothschild made his allegations, in a letter to The Times published on Tuesday, the Electoral Commission said it had not seen any evidence to suggest that the law had been broken. Although accepting a foreign donation is illegal, soliciting one – which the Tories deny – is not.

But today, in his letter, Huhne said that section 61 of the Political Parties, Elections and Referendums Act 2000 (PPERA) said it was an offence to commit an act "in furtherance of any arrangement which facilitates or is likely to facilitate, whether by means of any concealment or disguise or otherwise", the payment of an illegal donation.

Huhne said that Rothschild's account suggested that an offence might have been committed.

In his letter to the commission's chairman, Sam Younger, Huhne said: "Given that this offence is punishable by up to a one-year custodial sentence, I am sure you will agree with me on the need to establish quickly whether the law has been broken and clarify your position if you believe that there is no case to answer."

The commission should either clarify the law, or launch a full investigation, he said.

The commission has already considered the section 61 point, which has also been raised publicly by the Labour MP Denis MacShane. It believes that, because no donation was made, section 61 does not apply.

A commission spokesman said this afternoon: "We have received the letter and we will reply in due course. But what we said yesterday, which is that we have seen no evidence of a breach of PPERA, is still our position."

In a separate move, Baker, a Liberal Democrat MP, said that he would be writing to the parliamentary commissioner for standards to seek clarification because there were strong grounds for believing that the shadow chancellor should have declared the visit to Rothschild's villa in the Commons register of members' interests.

Osborne and his family spent a weekend at the villa this summer.

Under Commons rules, MPs have to make a declaration if they receive hospitality worth more than 1% of their salary – around £610 – "which in any way relates to membership of the house".

Osborne was at school with Rothschild and they have been friends for years. According to a Tory source, he did not declare the visit in the register because he believed it was a social visit that had nothing to do with his work as an MP.

But Baker said that he felt Osborne should have registered the visit because, as shadow chancellor, he was in a different position from an ordinary backbench MP. He said that the guidance issued to MPs specifically says that decisions to register hospitality are "a matter of judgment" and that "if there is any doubt" an MP should register.

"I think it's very important you establish the rules, not just for Mr Osborne's case, but also Peter Mandelson and any other MPs who may have been involved in accepting hospitality from a third party," Baker told the BBC's World at One.

"Clarity and openness is always the safeguard for individual Members of parliament and I recommend Mr Osborne should register this stay."

Later Baker said that his letter to the parliamentary commissioner for standards, John Lyon, which he would be writing this afternoon, would not be a formal complaint. Instead it would be a request for clarification.

Baker said that he would mention Osborne and Mandelson, who has also enjoyed Rothschild's hospitality. As a peer, Mandelson has to follow House of Lords rules, not the Commons ones enforced by the parliamentary commissioner. But Baker said it would be helpful if Lyon could provide clearer guidelines for ministers as well as for MPs.

Baker's intervention came as David Cameron said that the Conservatives would cooperate with any inquiry into the Osborne-Deripaska affair.

"We will obviously cooperate with any investigation that takes place but it's not at all clear what the prime minister was talking about [when he called for an investigation in the Commons yesterday]," Cameron said.

Cameron said that Gordon Brown's own spokesman was unable to say who should carry out an inquiry, or what they should investigate.

In a further reference to Brown's comments in the Commons, Cameron said: "I don't know whether he misspoke or whether he was keeping it going to play politics with it."